(AFP) Some 70 percent of the country's small and medium-sized industries (SMIs) are facing cashflow problems as the global slowdown begins to bite, reported Business Times today.

Worst hit are industries involved in building materials, automotive parts, printing, electrical goods and electronics, the National Small and Medium-scale Industry Association vice president Lee Teck Meng told the daily.

"I can't give an official figure but based on the feedback given by our members, some 10,000 companies dealing in 128 trades are affected by the global economic slowdown," he said.

Other SMIs involved in food, clothing and textiles, footwear and leather products and rubber and plastic products were doing reasonably well, he said.

The SMIs accounted for 65 percent of the country's exports of RM373.4 billion last year, the daily said.

Regional expansion

Lee urged SMIs to expand regionally ahead of the 2003 opening of the ASEAN Free Trade Area and to embrace information technology.

"The local SMIs must buck up now because we are small compared with the giant SMI of countries such as China and Hong Kong," he said.

"The SMIs have to concentrate on markets beyond our shore."

Almost 21 percent of all the country's exports go to the United States, making it vulnerable to the economic slowdown there.

The government in March revised downwards its economic growth forecast this year from seven percent to between five and six percent.

Most analysts predict the economy will grow by less than half the 8.5 percent rate of last year.